Jack Bogle, founder of Vanguard Group's largest fund shares, advises investors swept away the wave of emotion when it comes to deciding which paper to take in the portfolio - for AMarkets materials.
Bogle recommends not to panic - not to sell the paper, when suddenly the prices begin to plummet. The expert advises to stick to such a disposition of the portfolio: 60% equity and 40% bonds.
Bogle says this his "winner formula" does not bring him here for many years, regardless of economic cycles, bearish or bullish trend. The expert makes a small reservation - older people that conservative in their beliefs and sentiments, may reduce slightly the proportion of shares and increase the share of the debt. The emotional factor can destroy a profitable trade as an idea - says Bogle.
He never tires of repeating - if you have decided, you can not panic at his abruptly change. players spend too much energy, time and emotional resources to ensure that guess - the market has bottomed out or not yet. Too many players are willing to jump off a cliff and break - just to stay with the bulk of the same panicked investors. Crowd Psychology to control the masses in full. This is perhaps the greatest risk - sums Bogle. The expert, however, believes that in front of investors waiting for a slight correction on the S & P500, is not very impressive, but still.